Hampden & Co has reported growth in deposits, lending, and client numbers as it highlighted growing demand for personalised banking services in the first half of the year.
But profits at the boutique bank dipped as customers continued to move money to term deposit accounts to take advantage of higher interest rates.
Edinburgh-based Hampden, which opened its doors in 2015, reported that total deposits, across all current, call, notice, and term accounts, increased by 15.8% £895 million in the first half, compared with the same period in 2023. That came as client numbers increased by 15.2% to 5,858, driven by referrals from professional advisers and introductions by existing clients.
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The bank, which has more than 160 staff, reported that total lending increased by 20.4% to £555m year-on-year, amid strong support from mortgage intermediaries and as interest rates stabilised. The base rate was reduced by 0.25 percentage points to 5% by the Bank of England on August 1, the first cut to the bank rate since March 2020. Prior to this month, borrowing rate had been held at 5.25% since August last year, prior to which it had been increased by the Bank of England’s Monetary Policy Committee on 14 consecutive occasions, in an attempt to combat surging inflation.
Hampden, which was launched by former Adam & Co banker Ray Entwistle in 2013, underlined the higher cost of deposits as demand for term deposits continued to rise in the first half. This was reflected as pre-tax profits dipped to £4.2m, compared with £5.1m in the first half of last year.
Total income for the first half was booked at £14.9m, down from £15.3m, while balance sheet assets reached £1 billion for the first time.
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Hampden chief executive Graeme Hartop, who will step down after 11 years in the post in October, said: “Our results for the first half of 2024 reflect our reputation for personalised service and the value clients across the UK place on having a banker they can speak to.
“We continue to invest in the business, to add to and enhance the experience for clients. Apple Pay and Google Pay are recent additions and we will upgrade our digital banking service later in the year.”
Hampden announced in May that Mr Hartop, a former managing director of Scottish Widows Bank, will be succeeded by Tracey Davidson in October. Ms Davidson will join from Handelsbanken UK, where she is deputy chief executive.
Hampden, which has offices in Edinburgh and London, announced in April that it would pay its inaugural dividend to shareholders, as it reported a pre-tax profit of £9.1m for 2023, up from £2.2m in 2022. It did not disclose the value of the pay-out.
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Mr Hartop said at the time: “Our accessible and personalised approach to banking is valued by our existing clients and has attracted many new clients. It shows that many people, including high-net-worth and affluent customers of high-street lenders, appreciate the benefits of relationship banking.
He added: “In an environment where interest rate rises have encouraged people to use savings to pay down debt, the bank grew both deposits and lending in 2023.
“The high volume of referrals from other advisers, including wealth managers, solicitors, accountants and mortgage brokers was further positive endorsement of the bank, our staff and our ability to work in partnership with these other professionals.”
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